Like most metropolitan areas across the United States, San Diego is vulnerable to the impact of higher interest rates.
According to Freddie Mac, the average 30-year fixed-rate mortgage was 7.49%, as of Oct. 5, up from the 2.8% average on Oct. 8, 2020.
“When interest rates go up, it’s more expensive to borrow, and most people can’t afford to pay cash for a house, especially in an expensive area like San Diego, so they need to take out a mortgage,” University of San Diego Economics Professor Alan Gin said. "With higher interest rates, they have to pay more in interest, so their monthly payment is a lot higher, and that will price some people out of the housing market."
The higher interest rates are causing a reduction in real estate transactions.
Get top local stories in San Diego delivered to you every morning. Sign up for NBC San Diego's News Headlines newsletter.
“What we are seeing is a little bit of a slowdown in terms of transactions because people can’t afford to buy houses, so there’s reduced demand for houses and that affects other parts of the economy,” Gin said.
The U.S. Federal Reserve has been raising interest rates to combat inflation. Many economists expect interest rates to stabilize or be lowered in 2024 if inflation cools.
In the meantime, there are opportunities, according to many Realtors.
Local
“Right now, it actually might be a good idea to get your foot in the door, literally," Realtor Destiny Roxas told NBC 7. "I say that because many sellers are aware of what’s happening in the market, they know that interest rates are high so therefore some of them are willing to give concessions to help incentivize buyers."
